The Risks of Concrete Slabs and Damage to Home Buildings

17 August 2026 in Building and Construction Law | 7 min read | skip to FAQs

This article discusses a landmark 2022 Building and Construction judgement which highlights the risks of concrete slabs and damage to home buildings. It also highlights several legal issues pertinent to home building design and builder’s liability in relation to engineering designs under the Home Building Act, the Design and Building Practitioners Act and contractually.

The case involves damage to the concrete slab of a home building that was so significantly damaged through water ingress and poor drainage that the home needed to be completely knocked down and rebuilt. In summary, the builder claimed that the engineer’s design and specifications for the concrete slab was inadequate. However, the Court ultimately found that the design of the slab was indeed adequate. It was found that the damage to the house occurred because the ground conditions underneath and around the concrete slab were not properly prepared by the builder prior to the laying of the slab.

Legal Overview of the Case

There were two separate but related court cases. The second case dealt with the cross claims that were brought in the first case and the damages awarded to the home owners. The relevant case and judgment by the Court is  Di Lullo v JG King Pty Ltd (No 3) [2026] NSWDC 218 , and its preceding judgement Di Lullo v JG King Pty Ltd [2025] NSWDC 213.

The plaintiffs engaged JG King Pty Ltd (‘the Builder’) to build a house on their property, which was completed in June 2017. Following completion of the build, elements of the house, including the roof, the walls, the wall bracing, wet areas, cornices, floors and fixtures suffered damage because of significant movement in the house. The movement was attributed to the slab on which the house was built, which is a waffle slab, becoming distorted in a process referred to as ‘Edge Heave’.

Ultimately, the Builder (JG King Pty Ltd) was found liable for property damage that was caused by a waffle slab (a concrete slab in the shape of a waffle with a square grid pattern) and the fill used adjacent to the waffle slab.

As the Builder was liable on all the Plaintiffs’ (the home owners) claims, the Court had to assess the cost of placing the homeowners in the position they would have been in had the contract been properly performed. The Plaintiffs pursued the Builder for the costs of full demolition and rebuild of the property as well as the cost of alternative accommodation while the works are carried out. Although the Builder argued that the property damage could be repaired at a significantly lower cost, the Court ultimately rejected this argument.

The Claims made during the Initial Case

By the Home Owners

In Di Lullo v JG King Pty Ltd [2025] NSWDC 213, the initial proceedings, the Plaintiffs alleged that the Builder:

1. Breached statutory warranties provided for under section 18B(1) of the Home Building Act 1989 (NSW);
2. Breached its contractual duties; and
3. Breached the duty of care imposed under section 37 of the Design and Building Practitioners Act 2020 (NSW).

By the Builder

The Builder denied liability, and brought a cross claim against both:

1. The engineer who designed the slab for the Plaintiffs; and
2. The engineer’s insurer.

By the Engineer

The engineer brought a cross claim against their insurer seeking an order that the insurer indemnify the engineer against any liability that may arise out of the slab design.

The Findings of the Court in the Initial Case

Cole DCJ found that the slab movement was caused by the Builder’s construction practices, particularly:

1. Placing inappropriate sandy fill adjacent to the slab;
2. Failing to properly compact the fill;
3. Failing to provide the drainage required by the engineering design; and
4. Creating conditions that permitted moisture to reach the reactive clay beneath or adjacent to the slab.

The Court preferred the Plaintiff’s expert evidence, due to JG King’s competing evidence depending upon assumptions that were not established and did not sufficiently explain the physical mechanism responsible for the Edge Heave.

What Legislation did the Builder Breach?

Liability under the Home Building Act 1989

The defective placement of the sandy fill and failure to install the required drainage caused slab movement and substantial damage within the statutory warranty period. Therefore, JG King breached their statutory warranties under section 18B of the Home Building Act.

Liability under the Design and Building Practitioners Act 2020

The Court also found that JG King breached the duty imposed by section 37 of the Design and Building Practitioners Act. Its failure to carry out the work in accordance with the design, together with its negligent placement of fill adjacent to the slab, caused building defects and consequential economic loss. Section 37 of the Design and Building Practitioners Act states that “A person who carries out construction work has a duty to exercise reasonable care to avoid economic loss caused by defects.

The Builder could not avoid the above statutory duties by relying upon the acts of subcontractors or seek to reduce its liability through the proportionate-liability scheme in the Civil Liability Act 2002 (NSW). In other words the Builder attempted to argue a defence that the Builder’s statutory obligations were delegated to the Builder’s subcontractors or the engineer. The Court rejected this argument and found that such duties and obligations were non-delegable.

The Findings of the Court in the Second Case

Cross claims were Dismissed

JG King’s cross claim against the engineer failed. The slab design was not shown to be defective. As the engineer incurred no liability, the related indemnity claim involving the engineer’s insurer also failed.

In Di Lullo v JG King Pty Ltd (No 2) [2026] NSWDC 82, the cross claims were formally dismissed. JG King was ordered to pay the engineer’s and the insurer’s costs, including indemnity costs following unaccepted settlement offers.

The Assessment for Damages

In Di Lullo v JG King Pty Ltd (No 3) [2026] NSWDC 218, the homeowners sought the cost of:

1. Demolishing the dwelling and existing slab;
2. Removing the problematic fill;
3. Reconstructing a compliant dwelling; and
4. Obtaining alternative accommodation during the works.

The estimated cost was approximately $1.3 million.

JG King contended that the house could be repaired for slightly less than $200,000.00. Its proposal involved removing or addressing the defective fill, injecting expanding resin beneath the existing foundation to re-level the slab, and repairing the consequential damage.

How were the Damages Paid to the Homeowner Measured?

The Court applied the orthodox principle that damages for breach of a building contract should place the owners, so far as money can do so, in the position they would have been in had the contract been sufficiently performed, per Robisnon v Harman (1848) 1 Exch 850 at 855.

Where the contract requires construction conforming to specified standards, the prima facie measure is the reasonable cost of obtaining conformity. The question is not simply which method is cheapest. It is whether the proposed expenditure is a reasonable means of securing the result specified in the contract.

The Court applied the approach reaffirmed by the NSW Court of Appeal in 85 Princess Pty Ltd v Fleming [2025] NSWCA 261. Where a defendant contends that a cheaper remedial method will produce the same practical outcome as reinstatement, the defendant bears an evidential burden to establish:

1. The proposed method;
2. The likely effectiveness;
3. Its cost; and
4. That it will achieve a practical outcome equivalent to full rectification.

The Court ultimately rejected the Builder’s proposal for rectification of defects based on the above principles.

Reasons for Rejection of the Builder’s Proposal to Repair the Defects

The Court was not satisfied that JG King’s proposed repair would provide an equivalent, durable and reliable result. Relevant deficiencies included, among other things:

1. An absence of satisfactory evidence that the existing slab had retained its structural integrity;
2. Uncertainty as to whether the resin injection would reliably re-level the slab;
3. A risk that the works themselves would cause further damage;
4. Uncertainty about compliance with applicable Australian Standards;

The Court regarded demolition and reconstruction as the appropriate remedy that most closely approximates actual performance of the contract. It would be unreasonable to compel the homeowners to absorb the accumulated risks associated with retaining and repairing the existing slab.

Other Factors Considered by the Court

1.Role of the Homeowners’ Intentions

The Court considered the homeowners’ genuine intention to demolish and rebuild. Their intended use of the damages was relevant to whether the claimed reinstatement expenditure was reasonable.

2.Contributory Negligence

JG King alleged that the homeowners had contributed to the loss through lawn watering, landscaping and failures relating to plumbing leaks. The Court rejected this allegation. The homeowners had not been informed of the slab’s particular vulnerability and could not reasonably have known of it, therefore, their actions were characterised as foreseeable incidents of residential occupancy, and a newly constructed home could reasonably be expected to withstand them.

The Final Payment Awarded by the Court

The Court assessed demolition, reconstruction and associated alternative accommodation at approximately $1.3 million. Because that amount exceeded the District Court’s monetary jurisdiction, judgement was entered for the jurisdictional maximum of $1.25 million.

Key Takeaways

These decisions are significant in many principal respects:

1. A builder remains responsible where defective construction practices degrade an otherwise adequate engineering design. Compliance cannot be established merely by showing that an engineer designed the foundation system.
2. Liability under section 37 of the Design and Building Practitioners Act cannot ordinarily be diluted by attributing responsibility to subcontractors through proportionate liability. A builder wishing to recover from another participant must establish an affirmative cross claim against that participant.
3. The cheapest rectification proposal will not always determine damages. A defendant advancing a cheaper alternative must prove    through expert evidence, that it will reliably produce an outcome equivalent to the intended result pursuant to the contract.
4. The evaluation extends beyond abstract engineering feasibility. Compliance, durability, implementation, risk, warranties, insurance, marketability, construction duration and the owners’ intended use of the property may all bear upon whether the proposed alternative is reasonable.
5. District Court judgements do not bind the Supreme Court or Court of Appeal. Their treatment of damages is nevertheless consistent with binding appellate principles and provides a detailed application of those principles to severe residential foundation defects.

How can BSM Sydney Lawyers assist you?

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